Latest Money Blog Entries
-
Home Sales Poised to Dip After Tax-Credit Rush
November 23, 2009
Although home sales surged last month, many housing experts—and even real estate agents' own trade group—are expecting the market to retrench in the coming months as the jolt from a tax incentive's previously impending deadline subsides. On a seasonal basis, existing home sales jumped 10 percent last month from September and nearly 24 percent from October 2008, the National Association of Realtors reported Monday. But along with declining prices and attractive mortgage rates, sales were goosed by home buyers scrambling to close transactions before the original November 30 deadline for the $8,000 first-time home buyer tax credit, experts say. As that impact wears off, "we expect a partial reversal in December and early next year," Michelle Meyer, an economist at Barclays Capital, said in a report. Here are four things you need to know about the development:
1. Prices, Rates, Credit: Home sales were driven higher by three key factors. First, homes continue to get cheaper. The median price of an existing home in October dropped 7 percent from a year earlier. Meanwhile, 30-year, fixed mortgage rates were extremely attractive during the month, falling to 4.95 percent from 5.06 percent in September. On top of that, sales got a kick thanks to the first-time home buyer tax credit, which was originally scheduled to expire at the end of this month. "We think the story here is that people were rushing to complete transactions—the numbers are captured at the point of sales closing—ahead of the then scheduled expiration of the first-time buyer tax credit," Ian Shepherdson, chief US economist of High Frequency Economics, said in a report. However, on November 6, the president signed legislation pushing the tax credit's closing deadline back to the end of June and making most current home owners eligible for a similar perk of up to $6,500.
Money - The Home Front
-
Younger Americans Less Likely To Start Businesses
November 23, 2009
Over the weekend, Elliot Gerson of the Rhodes Trust wrote about the trend over the last two decades of more and more Rhodes scholars going into business over supposedly more noble pursuits such as medicine, law, science and public service (HT: David Boaz). Although he never explicitly says it, Gerson strongly implies that the financial crisis should make bright young people question the value of business as a career, and maybe even reverse this trend among Rhodes scholars (although he's not hopeful):
Many thought a silver lining of last year's financial crisis -- or from the populist rage that flared against Wall Street excess and to profits born not from creativity but from leverage -- would be that earnings differentials would return from obscene to merely enormous levels, if not to the very generous multiples that had long been adequate to fuel a vibrant economy. Well, the hyper-bonuses are back -- astonishingly having been made even easier to achieve with taxpayers socializing the downside risks. And the crisis? What crisis?
So how many more of America's young and brightest will ask themselves what kind of chumps they are to give up the chance to earn 100 or 500 times as much as their mentors, their doctors, their favorite professors, their idols and heroes?
But Gerson should be careful what he wishes for. It's probably true that the Great Recession has made business a less desirable career. But when business loses its luster among those entering the workforce, we don't just lose Ken Lays or subprime mortgage lenders--we also lose the entrepreneurs who will start the next great businesses.
Money - Capital Commerce
-
Executives Eliminate Worker Pensions, Get $350 Million
November 23, 2009
Some executives have received huge compensation packages even as their firms eliminated worker pensions. Ten large U.S. companies paid senior executives a total of $350 million in the 5 years leading up to terminating traditional pension plans for employees, a new Government Accountability Office analysis found.
Money - Planning to Retire
-
Should Consumers Vote With Their Dollars on Gay Rights Issues?
November 23, 2009
Remember when progressives staged a boycott of Whole Foods after CEO John Mackey wrote an op-ed criticizing single-payer healthcare, and critics of Obamacare staged a "buycott" to promote the company? Of course, that won't be the last time activists use consumer power as ammunition in political battles.
What was strange about that episode is that Mackey has for a long time publicly declared himself as a libertarian, and made clear he supports economic policies many progressives find horrific. But what about companies where we don't know the ideologies of executives? Activists have an incentive to find out those secrets.
Enter the Corporate Equality Index from the Human Rights Campaign. It's an annual index that rates companies based on what HRC sees as adherence to LGBT rights. Large employers filled out surveys with questions regarding company policies toward LGBT people, such as harassment policies, or benefits for same-sex couples.
You might think that because it's a voluntary survey, only the most progressive companies would comply. BUt HRC says that the index reveals stark differences between some competing companies.
Money - Capital Commerce
-
Why Performance Reviews Deserve a Better Rap
November 23, 2009
Performance evaluations often get a bad rap by people who see them as a bureaucratic waste of time.
And, yes, if you treat performance evaluations as a waste of time--each one an exercise you just have to get through so you can say it was done--that's exactly what they will be. But when done right, by good managers, performance evaluations can be meaningful and useful, both to the employee and the manager evaluating her.
Money - On Careers
-
This Is What Happens When Free Markets Fail
November 23, 2009
It's an agonizing time to be a laissez-faire capitalist.
Many folks who fancy themselves free marketeers are aghast as they watch the Obama administration taking the wheel at failed automakers, drafting a sweeping overhaul of healthcare, dictating salaries at bailed-out banks, and preparing stringent new rules for the whole financial sector. The U.S. Chamber of Commerce is mounting an ad campaign touting the virtues of free enterprise, as if it's a foreign concept. Fox News frets daily about a socialist takeover of the economy. Some Americans who begged for government relief a year ago, when the economy was in free-fall, have buyer's remorse now as they watch the public sector swell.
Money - Rick Newman
-
Act Now to Reverse 2009 Minimum Plan Payouts
November 23, 2009
Nov. 30 is the deadline for most people to reinvest any unwanted minimum payouts from retirement plans. When people with IRAs, 401(k)s, and other qualifying plans reach the age of 70 and a half, they must begin taking at least minimum required distributions (RMDs) from these plans, according to IRS rules. But there was widespread sentiment to waive this requirement for 2009 RMDs because big 2008 investment losses would have forced many retirees to sell holdings at depressed prices.
[See Best Affordable Places to Retire.]Money - The Best Life
-
Palin Fan Can't Believe Sarah Supported Bank Bailout
November 20, 2009
Skip to about two minutes into this video, and enjoy the awkwardness.
She responds, "I don't think if you asked [Palin] today, she would support it."
Well, of course not. That's what you do when supporting small government suddenly becomes politically convenient—you switch positions.
Bruce Bartlett has a column today on a much bigger instance of Republican hypocrisy regarding small government. Most Republicans in Congress today argue that healthcare reform is unacceptable because it would cost $900 billion over 10 years. But six years ago, when President Bush proposed a prescription drug benefit that would cost $1 trillion over 10 years, many of those same Republicans were all for it.
Money - Capital Commerce
-
Fidelity: Average 401(k) Balance Rebounds
November 20, 2009
The average 401(k) account balance rose to $60,700 as of September 30, up nearly 13 percent from the end of the second quarter, according to a new analysis of Fidelity-administered 401(k) plans. The gains reflect the recent stock market rally, new employee contributions, and enhanced employer 401(k) matches.
Money - Planning to Retire
-
Ron Paul Fed Provision Passes House Financial Services Committee
November 20, 2009
Ron Paul has received the most attention he's got since his presidential campaign with his "audit the Fed" bill. Now, that legislation seems to have a shot at passing, as it has been attached to Barney Frank's financial regulation bill.
But the irony is that, for Paul and other Republicans, in order to limit what they see as overreaching federal government power in the form of the Federal Reserve, they would have to greatly expand federal government power in the form of other aspects of the Frank bill. Among other things, it would establish a Consumer Financial Protection Agency, an idea that has been maligned by free-market groups.
See my interview with Rep. Paul for more on his plan, which may become a reality.
Money - Capital Commerce
